Brazil is expected to set a record for public-private partnerships in 2021, says consultancy

RIO DE JANEIRO, BRAZIL – Brazil should set a record for public-private partnerships (PPP) in 2021. The projection is from Radar PPP consultancy based on the number of projects planned for this year, particularly in social infrastructure.

Last year alone, 340 tenders were published, of which 17 were from the Federal Government, 46 from states and the Federal District, and 277 from municipalities. These are the highest numbers since the consultancy was founded in 2015.

“For 2021, we expect the largest number of projects and bids in the history of PPPs and concessions for prisons, schools, health units, and parks,” says Guilherme Naves, partner at Radar PPP.

Does this mean that investors are interested in investing in infrastructure in Brazil? Naves says yes. “Low interest rates boost the diversification of investments, including public infrastructure. Also, companies have encouraged governments to make contractual commitments in which the investor takes a little more risk, but receives in return more security and stability in a long-term revenue stream.”

According to Naves, one of the highlights of this year should be airport concessions. The expectation is that in April, the sixth round of concessions will be carried out – which includes Curitiba, Foz do Iguaçu, Goiânia, Teresina, Manaus, and 18 other airports. The seventh-round projects – Congonhas (SP) and Santos Dumont (RJ) – are in the modeling phase. It is also possible that the bidding will be redone for Viracopos (SP).

Besides, the specialist mentions the several biddings for port terminals and the West-East Integration Railroad (Fiol) in Bahia, which should mobilize more than R$3 billion (US$526 million) of private investment.

Among the highway projects, there are expectations for the new BR-116/101/SP/RJ concession, as well as stretches that are part of President Dutra toll highway (R$15 billion in estimated private investment) and the gigantic Paraná Integrated Highways project (six lots that should generate more than R$42 billion in private investment).

“In the mobility area, it is possible that the W3 tramway (R$2 billion investment) will be built in Brasília and there is also the possibility of the TIC (Intercity Train) in the state of São Paulo (more than R$ 18 billion investment), which is being structured in partnership with the Inter-American Bank,” says Naves.

Another point that deserves to be highlighted is sanitation, which should take off with the new regulatory framework. It will have important concessions such as Cedae’s, which should have more than R$30 billion in estimated private investment.

Public lighting should also attract numerous investors. That is what happened in Petrolina (Pernambuco): on Tuesday, March 30th, the municipality signed a contract with the Engie concessionaire to modernize, expand and maintain the lighting system in the city of 350,000 inhabitants. The expectation is that R$90 million will be invested over 20 years.

“This PPP modeled by BNDES establishes several indicators and operational goals that the concessionaire must achieve, and that will impact its remuneration,” explains Cleverson Aroeira, superintendent of the BNDES’ Investment Partnership Structuring Area, in a statement.

“This allows the amount effectively paid by the municipality to be in line with the actual performance presented by the company, which encourages it to invest in good equipment, teams, and qualified processes so that the population of Petrolina can enjoy a quality public service.

A public–private partnership (PPP, 3P, or P3) is a cooperative arrangement between two or more public and private sectors, typically of a long-term nature. In other words, it involves government(s) and business(es) that work together to complete a project and/or to provide services to the population. Public–private partnerships have been implemented in multiple countries and are primarily used for infrastructure projects, such as building and equipping schools, hospitals, transport systems, and water and sewerage systems.

Source: CNN Brasil